ASX-listed Whitehaven Coal has reached an agreement to acquire the Daunia and Blackwater coking coal mines, jointly owned by BHP and Mitsubishi Development.
Whitehaven Coal will buy the two Queensland coal mines through two of its subsidiaries for up to $4.1bn (A$6.45bn) in cash. Subject to customary closing conditions and regulatory approvals, the transaction is expected to close in June next year.
This includes $2.1bn in an upfront payment to the BHP Mitsubishi Alliance joint venture at completion.
The miner will also pay $1.1bn over three years in tranches, including $500m on both the first and second anniversaries of closing and $100m on the third anniversary.
The company also agreed to pay a price-linked contingent payment of $900m in three tranches over three years.
This deal is scheduled to close in the June 2024 quarter, upon receipt of competition and regulatory clearances.
Upon closing, the acquirers will take on economic as well as operating control of the mines. This covers existing and future environmental liabilities and rehabilitation obligations.
In addition, the buyers submitted a $100m deposit, which can be retained by BHP and Mitsubishi in the event of the deal being scrapped.
BHP will utilise the proceeds to lower its net debt.
The Daunia coal mine is situated 30km from Moranbah, around 170km from Mackay in the Australian state of Queensland. It sits next to Whitehaven’s Winchester South development project in the Bowen Basin.
Daunia is a hard coking coal (HCC)-producing mine along with pulverised coal injection metallurgical coal products.
Over the next five years, the mine is estimated to produce an average of around 4.9 million tonnes per annum (mtpa) of saleable coal. The remaining life of mine (LOM) production will go on until 2040.
After the transaction is completed, products from the mine will continue to be exported to its Asian customers.
Blackwater mine is an open-pit mine and is considered to be one of the largest coal mines in the country. Located around 73km from Emerald in Queensland, it has coal production of roughly 12.4mtpa over the next five years.
The mine produces both HCC and semi-soft coking coal (SSCC) metallurgical coal products.
It is claimed to have an LOM of more than 50 years. The coal products are sold to customers in Asia.
Whitehaven CEO and managing director Paul Flynn said: “This is a compelling transaction for Whitehaven that accelerates our strategy, transforms our company and delivers substantial value for our shareholders. This transformational acquisition will pivot our portfolio towards metallurgical coal, which has been a core pillar of our strategy for many years, making this a better-balanced business.
“Our thermal coal business remains strategically important as we continue to provide much-needed coal products to support the global energy transition and as customers seek our high-quality and high-CV products to limit their emissions.
Flynn further noted: “Daunia and Blackwater produce much-needed metallurgical coal that is in high demand across Asia – including in India and South East Asia where population growth and economic development is expected to drive strong demand for steel production and metallurgical coal through to at least 2050. This acquisition will increase our exposure to these high-growth market segments while expanding our regional footprint through new customers.”
